7.4.docx - 1 7.4 Anticipated Versus Unanticipated Inflation...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. 7.4- Anticipated Versus Unanticipated Inflation a. Anticipated Inflation- rate of inflation that most individuals believe will occur. b. Unanticipated Inflation- inflation rate is higher or lower than expected c. Inflation and Interest Rates i. Nominal Rate of Interest- the market rate of interest observed in contracts express in today’s dollars. (if no inflation and anticipated inflation is 0) ii. Real Rate of Interest- the normal rate of interest minus the anticipated rate of inflation. d. Does Inflation Necessarily Hurt Everyone? i. Unanticipated inflation: Creditors lose and debtors gain 1. Benefits borrowers because nominal interest rate does not fully
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern